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Seven Days in Europe

The New Year kicks off with attempts to draft the new European fiscal compact, to be signed by the leaders of 26 member states in March. Current indications suggest that the drafting process will be anything but smooth. The European Parliament has already said that it cannot endorse the current draft of the treaty. MEPs on the treaty drafting group said in a joint statement on Wednesday that, “The latest draft of the proposed treaty is not compatible with the existing EU treaties and fails to respect the “Community method” of decision-making . . . Specifically, the draft does not guarantee that any decision to implement the new agreement would be taken via the normal procedures laid down in the EU treaties to ensure proper democratic scrutiny and accountability”.

In addition to rumblings from Parliament, a legal expert who helped write several EU treaties – Jean-Claude Piris – has warned that the new fiscal compact will not be enough to stop the financial crisis. “This little piece of paper being discussed now is a good step, but it will not be enough to solve the problems. More steps are needed,” Piris said at a think-tank event in Brussels on Tuesday. He urged the formation of a “temporarily avant-garde” group outside the existing EU Treaty to tackle the crisis. He also said national parliaments should get more involved in the reform process in Brussels to give it democratic legitimacy.

David Cameron has been boosted by the current treaty draft , which leaves out controversial references to the single market. Following last week’s meeting of negotiators from EU member states, the third draft has removed the reference to “deeper integration in the internal market” as one of the objectives of the agreement. The draft has also softened the obligation to enshrine a “golden rule” on balanced budgets into the constitutions of the 26 member states taking part in the new pact. The move comes after indications that several countries – notably euro-members Ireland and Finland, but also non-euro states wanting to sign up, such as Denmark and Romania – would have to hold referendums in order to change their constitutions.

Italian Prime Minister Mario Monti and German Chancellor Angela Merkel on Wednesday said they would support an EU-wide financial transactions tax, but the proposal remains controversial. Britain, Sweden and Denmark, as well as euro-member Malta, have spoken out against it in the absence of a global deal, fearing investors will move to more favourable countries such as Switzerland or Caribbean tax havens.

While Monti and Merkel may be in agreement over the transactions tax, they remain divided over the extent of austerity measures to be imposed on Italy. The Italian prime minister has warned that Italy’s voters will not tolerate deeper cuts to the nation’s budget. Despite original perceptions that Monti would be the technocrat’s technocrat – an economist who would rigidly implement the demands of Brussels and the financial markets, Monti has warned Angela Merkel that the Italian people will only put up with so much. “I am demanding heavy sacrifices from Italians,” Monti told Die Welt newspaper. “I can only do this if concrete advantages become visible.” If not, he said, “a protest against Europe will develop in Italy, including against Germany, which is seen as the ringleader of EU intolerance, and against the European Central Bank.”

A dispute between the European Commission and member states over civil servant salary increases will now end up in court. “The European Commission has today decided to take the Council to the Court of Justice for failing to adopt the council regulation on the annual adjustment to the remuneration and pensions of EU staff as anticipated in the staff regulations,” the executive said in a statement on Wednesday. The move comes after the council – representing member states – refused to sign off a 1.7 percent EU civil servant salary hike.

The European Commission has warned Hungary to change parts of its constitution or face legal action amid fears that Prime Minister Viktor Orban is using his large parliamentary majority to undermine the independence of key parts of the state. The commission has said it has “concerns” about the independence of the national central bank, the national data protection authority and the judiciary – in particular, on plans for mandatory early retirement of judges and prosecutors.

Finally, a Spanish politician is facing accusations of megalomania after going ahead with the construction of a €300,000, 24m-high statue of himself at a new airport. The monument to Carlos Fabra, head of the newly built airport in the eastern province of Castellon and local boss of the governing People’s party (PP), is being erected in the middle of a roundabout at the airport’s entrance. Although still only half built, the 20-tonne copper sculpture has provoked outrage in a country gripped by ferocious public spending cuts and massive unemployment.